Instruction 15.1: for Following Problem(s), Consider These Debt Strategies Being Considered by Considered

question 59

Multiple Choice

Instruction 15.1:
For following problem(s) , consider these debt strategies being considered by a corporate borrower. Each is intended to provide $1,000,000 in financing for a three-year period.
∙ Strategy #1: Borrow $1,000,000 for three years at a fixed rate of interest of 7%.
∙ Strategy #2: Borrow $1,000,000 for three years at a floating rate of LIBOR + 2%,
to be reset annually. The current LIBOR rate is 3.50%
∙ Strategy #3: Borrow $1,000,000 for one year at a fixed rate, and then renew the
credit annually. The current one-year rate is 5%.
-Refer to Instruction 15.1. After the fact, under which set of circumstances would you prefer strategy #3? (Assume your firm is borrowing money.)

• A) Your credit rating stayed the same and interest rates went up.
• B) Your credit rating stayed the same and interest rates went down.
• C) Your credit rating improved and interest rates went down.
• D) Not enough information to make a judgment.

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Definitions:

Rhetorical Analysis

The examination of texts to understand how they persuade or convey messages using rhetoric and language.

Argumentation and Persuasion

The use of logical reasoning and evidence to convince an audience, with the former focusing on logical reasoning and the latter on appealing to emotions and values.

Qualitative Analyses

Methods of data examination that focus on interpreting elements that are not easily quantified, aiming to understand concepts, thoughts, or experiences.

Multiplicity of Approaches

The use of various methods or strategies in research or problem-solving to address complex issues from different perspectives.